A United States judge has recently raised concerns over the selection of lead plaintiff for the Block.one initial coin offering (ICO) class-action lawsuit as many seem to have come forward due to the promise of high legal fees.
First reported by Coindesk, District Judge Lewis Kaplan said that as many as five investors, who are willing to be the lawsuit’s lead plaintiff, showed a lack of interest in the case.
In a class-action lawsuit, the lead plaintiff represents all the other plaintiffs in the court. That means, the lead plaintiff picks the lawyers and handles the legal fees as well.
A group of investors, called the ‘Williams Group’, has submitted incomplete and inaccurate trading data for the tokens received in the ICO, and the number of tokens sold by the group in its report. It even exceeded the number of tokens bought during the token sale by 3,000.
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Another plaintiff, Token Fund I, was formed two days before it filed a motion to become the lead plaintiff, and it could not even provide specific details about its trading.
“When a group applies for the lead plaintiff role, considerations relevant to the adequacy inquiry for PSLRA purposes ‘include whether the group’s members have a pre-existing relationship, whether they have cooperated effectively thus far, and whether they have a coherent plan for dividing responsibilities, resolving conflicts, and managing the litigation,’” the motion added.
A Billion-Dollar ICO without Legal Clarity?
Block.one is facing multiple class-action lawsuits in a US court as the investors are alleging that the promoters of the project have committed fraud by selling unregistered securities.
The judge has picked Crypto Assets Opportunity Fund (CAOF) as the lead plaintiff, saying it has a larger financial interest in the lawsuit and also provided accurate details.
Block.one raised over $4.1 billion in an ICO that lasted for a year. Last October, the Securities and Exchange Commission (SEC) settled with the crypto project for a fine of $24 million, 0.0058 percent of the total raised sum.